2024-08-23 06:27

LONDON, Aug 26 (Reuters) - The latest earnings from AI darling Nvidia and key inflation numbers in the euro area and Australia should keep markets busy in the coming week. Gold's relentless climb to record highs and a dollar under pressure as U.S. rate cut speculation builds are also in investors' sights. Here's your guide to the week ahead in financial markets from Rae Wee in Singapore, Sruthi Shankar in Bangalore, Ira Iosebashvili in New York, Yoruk Bahceli in Amsterdam, and Pratima Desai in London. 1/ NVIDIA, YOU'RE UP Investor enthusiasm for artificial intelligence could be tested when chipmaker Nvidia reports earnings on Aug. 28 (NVDA.O) , opens new tab. Nvidia’s chips are seen as the gold standard in the AI-space and its shares are up around 160% this year, helping to power the S&P 500 to record highs. But the stock's stunning, multi-year run and the AI-mania have also drawn comparisons to the dot-com craze that imploded more than two decades ago. Investors’ reaction to disappointing results from megacap names such as Alphabet and Tesla last month suggests markets may not be in a forgiving mood, especially when valuations for many companies in the sector are stretched. Data highlights meanwhile include Friday's U.S. Personal Consumption Expenditures (PCE) price index, a key inflation gauge tracked by the Federal Reserve. 2/ WHEN SEPTEMBER COMES August euro zone inflation numbers on Friday will be key to European Central Bank policymakers deciding whether or not to cut rates in September. The data, preceded by national releases starting on Thursday, follows a small but unexpected rise in July, highlighting a bumpy last mile in curbing inflation. Headline inflation may ease as oil prices have fallen, but focus will remain on the core figure and the dominant services sector, where price growth remains stickier. Any upside surprises may warrant caution, as traders have ramped up ECB rate cut bets in recent weeks. Focus has turned to growth risks, but euro zone business activity showed surprising strength in August. Traders fully price in another 25 basis point rate cut on Sept. 12, and see a high chance of two more moves after that by year-end. 3/ HIGH STAKES The stakes are high for the Reserve Bank of Australia (RBA), which has insisted that interest rates need to stay restrictive for an "extended period" since underlying inflation remains too high for comfort. Wednesday's July inflation numbers could show headline inflation diving back into the RBA's 2-3% target band for the first time in three years. And any signs that inflation pressures are abating could pile pressure on the central bank. It has become an outlier globally with a reluctance to lower rates while many peers look to kick off, or have already begun, easing cycles. Investors are also hoping that Wednesday's data could provide some relief to consumer sentiment, which has taken a hit from the weight of steep borrowing costs. Elsewhere, Tokyo's August inflation report on Friday potentially offers further clues on Japan's rate outlook. 4/ EURO BULLS The euro is at its highest this year against the dollar, benefiting from recent ructions in global markets. Diverging U.S. and euro area rate expectations are behind its gains. Traders price around 100 bps of Fed rate cuts by year-end, up sharply from before the latest U.S. payrolls data, while only fully pricing two more 25 bps ECB cuts. The question is whether the euro, also at its highest on a trade-weighted basis on record, can sustain its momentum. Germany's business activity contracted by more than expected in August, a negative sign for Europe's economic engine, while euro zone wage growth slowed last quarter, supporting the case for an ECB September cut. Euro bulls are a shy bunch, price action in recent years suggests. They may need more convincing of the euro's rebound before coming out in force. 5/ ALL THAT GLITTERS Gold has hit consecutive records since 2022, and has surged over 20% so far this year. Now $3,000 an ounce beckons . The stars have aligned for the precious metal used primarily to preserve wealth during periods of heightened security risks and political and economic turmoil. Russia's war on Ukraine triggered gold's rally in February 2022. Soaring commodity prices in the aftermath fueled inflation, which erodes the value of monetary assets. Middle East tensions and uncertainty from the fast-approaching U.S. Presidential election have spurred further gains. Reinforcing the buy bullion trade is the prospect of U.S. interest rate cuts, pressuring the U.S. currency and boosting gold's appeal. It has a negative relationship with the dollar. But gold bulls should bear in mind the old adage that "nothing goes up in a straight line" because markets typically "buy the rumour, sell the fact". Sign up here. https://www.reuters.com/business/take-five/global-markets-themes-graphic-2024-08-23/

2024-08-23 06:21

JOHANNESBURG, Aug 23 (Reuters) - Gold Fields (GFIJ.J) , opens new tab said on Friday it expects to produce much less gold this year than previously forecast, as weather-related challenges weigh down production at a new mine in Chile. The Johannesburg-based gold miner said its 2024 output has been scaled down to between 2 million ounces and 2.15 million ounces from a previous forecast of about 2.3 million ounces. Gold Fields' profit slumped to $320.7 million in the first half of this year ended June 30, compared with about $458 million a year ago, taking a hit from declining gold output. It also faced production setbacks at South Deep mine in South Africa during the reported period. Earlier this month, Gold Fields agreed to buy Canadian miner Osisko (OSK.TO) , opens new tab for about $1.57 billion cash, in a deal that will help it grow in the Americas region. The operational performance was "disappointing", CEO Mike Fraser said in a statement, adding that the decline in output during the first half was due to unplanned events and delays in raising output at the new Salares Norte mine in Chile. Sign up here. https://www.reuters.com/markets/commodities/gold-fields-cuts-output-forecast-icy-weather-weighs-down-chile-mine-2024-08-23/

2024-08-23 05:59

Global stocks rally after Fed signals cuts S&P 500 trades near all-time high Dollar and Treasury yields fall Oil rebounds Aug 23 (Reuters) - Wall Street and global shares jumped on Friday toward all-time highs, while Treasury yields slumped and the dollar languished, after a speech by U.S. Federal Reserve Chair Jerome Powell confirmed the United States would soon begin interest rate cuts. Powell, in remarks on Friday at the annual economic symposium in Jackson Hole, Wyoming, said "the time has come" to cut interest rates as rising risks to the job market left no room for further weakness and inflation was in reach of the Fed's 2% target, offering an explicit endorsement of an imminent policy easing. "Powell gave the market just enough dovishness to support the market while avoiding the potential pitfall of inducing fear," Carl Ludwigson, managing director at Bel Air Investment Advisors, said in an email. On Wall Street, the Dow Jones Industrial Average (.DJI) , opens new tab rose 1.14%, to 41,175, the S&P 500 (.SPX) , opens new tab gained 1.15%, to 5,634 - near an all-time high - and the Nasdaq Composite (.IXIC) , opens new tab was up 1.47%, to 17,877. Europe's broad STOXX 600 index (.STOXX) , opens new tab rose around 0.5%, its highest level in over three weeks and clocking a weekly advance for the third straight week. Asian shares outside Japan had nudged down 0.1%, but Japan's Nikkei (.N225) , opens new tab gained 0.4% as investors digested inflation data and remarks from Bank of Japan Governor Kazuo Ueda flagging a willingness to raise interest rates if the economy and inflation turn out as forecast. That left MSCI's all-country world index (.MIWD00000PUS) , opens new tab up about 1.1%, and with early August's turmoil in the rear view mirror, just above its mid-July all-time peak. Traders increased bets for a bigger rate cut in September following Powell's speech, with the fed funds futures now pricing in a 37% chance of a 50 basis point cut next month, up from about 25% late on Thursday. Traders are also pricing in about 106 bps of cuts by the end of the year. "The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks," Powell said in his speech. U.S. Treasury yields fell across the board. The yield on benchmark U.S. 10-year notes fell 5.9 basis points to 3.803%, from 3.862% late on Thursday. The 2-year note yield, which typically moves in step with interest rate expectations, fell 9.7 basis points to 3.9132%, from 4.01% late on Thursday. Its German equivalent was steady at 2.226%. The dollar turned lower and sterling rose to its highest in more than two years on Friday. The euro gained to $1.1189, up 0.7% on the day, hitting a one-year high. The Japanese yen strengthened, with the dollar down 1.36% at 144.27 after the Fed news and Bank of Japan Governor Ueda's comments on rates. Data out early in the day showed Japan's core inflation accelerated for a third straight month, but a slowdown in demand-drive price gains suggest no urgency for any immediate rate hikes. "FX is a relative game, so the expectation for the Fed to join the other major banks soon in cutting rates is driving the dollar lower," said Uto Shinohara, managing director and senior investment strategist at Mesirow in Chicago. Oil prices jumped more than 2%, rebounding after losses earlier in the week on swelling U.S. crude stocks and a weakening demand outlook in China. Gold prices added about 1.1% to $2,510 an ounce, near the record high of $2,513 hit just on Tuesday. Sign up here. https://www.reuters.com/markets/global-markets-wrapup-1-2024-08-23/

2024-08-23 05:25

Canadian National workers to return to work on Friday Work stoppage at Canadian Pacific still ongoing Labour Minister MacKinnon expects trains running within days Business groups and companies demanded government action Teamsters union says picket lines will remain in place for now OTTAWA, Aug 22 (Reuters) - Workers at Canadian National Railway (CNR.TO) , opens new tab will begin returning to work on Friday, the Teamsters union said, hours after the Canadian government moved to end an unprecedented rail stoppage. The union said the work stoppage at Canadian Pacific Kansas City (CP.TO) , opens new tab would continue pending an order from the Canadian Industrial Relations Board (CIRB). The union and company officials are scheduled to meet with the board on Friday morning. Canada's top two railroads, Canadian National Railway and Canadian Pacific Kansas City had locked out more than 9,000 unionized workers earlier on Thursday, triggering a simultaneous rail stoppage that business groups said could inflict hundreds of millions of dollars in economic damage. The Canadian government on Thursday announced that it would ask the country's industrial relations board to issue a back-to-work order that should come soon. The CIRB, which is independent, will now consult the companies and unions before issuing an order. CN had said it would end its lockout on Thursday at 6 p.m. ET (2200 GMT). CPKC said it was preparing to restart operations in Canada and further details on timing would be provided once it received the CIRB's order. "I assume that the trains will be running within days," Labour Minister Steven MacKinnon told reporters. As well as requesting a back-to-work order, MacKinnon asked the board to start a process of binding arbitration between the Teamsters union and the companies, and extend the terms of the current labor agreements until new agreements have been signed. The sides blamed each other for the stoppage after multiple rounds of talks failed to yield a deal. In a new statement during the early hours on Friday, the Teamsters union posted on X , opens new tab that it had taken down picket lines at CN. CN spokesperson Jonathan Abecassis told the Canadian Broadcasting Corp it could take the company a week or more to catch up on shipments. MacKinnon's decision marked a change of mind by the Liberal government of Prime Minister Justin Trudeau, which had said it wanted to see the matter settled at the bargaining table. "We gave negotiations every possible opportunity to succeed ... but we have an impasse here," MacKinnon said. "And that is why we have come to this decision today." RELIANT ON RAIL Business groups and companies had demanded the government act. Trudeau, in a post on X, said "collective bargaining is always the best way forward," but added governments must act when faced with serious consequences to supply chains and the workers who depend on them. Canada is the world's second-largest country by area and relies heavily on railways to transport a wide range of commodities and industrial goods. Its economy is heavily integrated with that of the United States, meaning a stoppage would roil North American supply chains. "We are pleased the government has responded to our calls to intervene ... A prolonged stoppage would have imposed enormous costs on Canadian business," the Canadian Manufacturers & Exporters, an industry group, said in a statement. The rail companies previously said they were forced into the lockouts to avoid strikes at short notice. They said they had bargained in good faith and made multiple offers with better pay and working conditions. Paul Boucher, head of the Teamsters rail union, had accused CN and CPKC of being "willing to compromise rail safety and tear families apart to earn an extra buck". Unions typically do not want contracts decided through arbitration as it removes their leverage from withholding labor to secure better terms. The left-leaning New Democratic Party, which has traditionally received strong union support and props up Trudeau's government, opposed the government's decision. "Justin Trudeau has just sent a message to CN, CPKC and all big corporations - being a bad boss pays off," party leader Jagmeet Singh said in a statement. The stoppage has crippled shipments of grain, potash and coal while also slowing the transport of petroleum products, chemicals and autos. Tens of thousands of people who depend on certain commuter rail lines into Toronto, Vancouver and Montreal were also hit by the lockouts, since all train movement on these CPKC-owned lines had halted indefinitely. The stoppage was largely rooted in scheduling, availability of labor and demands for better work-life balance, according to the union and companies. It comes after Ottawa introduced new duty and rest-period rules in 2023. Sign up here. https://www.reuters.com/business/autos-transportation/teamsters-canada-says-canadian-national-workers-will-return-work-friday-2024-08-23/

2024-08-23 05:24

NEW YORK, Aug 23 (Reuters) - The dollar fell and sterling rose to its highest in more than two years on Friday after Federal Reserve Chair Jerome Powell gave an unambiguous signal that the long-anticipated U.S. interest rate cut would come next month. The weak dollar also saw the euro hit a 13-month high, and the U.S. currency marked a 17-day low versus the yen. At his keynote speech to the Kansas City Fed's annual economic conference in Jackson Hole, Wyoming, Powell said, "The time has come for policy to adjust," given that upside risks to inflation have diminished and downside risks to employment have increased. "We do not seek or welcome further cooling in labor market conditions," Powell said. "We will do everything we can to support a strong labor market as we make further progress toward price stability. With an appropriate dialing back of policy restraint, there is good reason to think that the economy will get back to 2% inflation while maintaining a strong labor market." Traders on Friday continued to bet on a quarter-percentage-point rate cut at the Fed's Sept. 17-18 meeting, putting the odds at 65% after Powell's remarks. But they priced in about a one-in-three chance of a bigger 50-basis point cut, up from a little more than a one-in-four probability earlier. The euro and yen rose. This weakened the dollar index , which measures the greenback against a basket of six currencies including those two. The index fell 0.81% from late Thursday to 100.64, having been slightly firmer before Powell spoke. "I think the markets' reaction, which has been the dollar a bit weaker, bond yields a bit lower, is about right. It's not like he said, 'Yeah, we're going to do three (cuts of) 50s to begin the easing cycle'," said Steve Englander, head of G10 FX research at Standard Chartered Bank in New York. "Implicitly, it opens the door to 50s at some point without giving a timetable for it. We still don't think 50 (basis points) is going to be the first move, but it could come quickly if the labor market continues to weaken," he said, referring to the Fed chief's remarks on inflation and employment. A move in September would pivot the Fed away from a restrictive interest rate policy in place since it started hiking to fight inflation in March 2022, hoisting the fed funds target range from about zero to 5.25%-5.5%, where it has stood since July 2023. Later on Friday Federal Reserve Bank of Chicago President Austan Goolsbee said in a CNBC interview that while he's not ready to explicitly call for a central bank rate cut, monetary policy is quite tight and not aligned with current economic conditions. "FX is a relative game, so the expectation for the Fed to join the other major banks soon in cutting rates is driving the dollar lower," said Uto Shinohara, managing director and senior investment strategist at Mesirow in Chicago. Sterling climbed to a more than two-year high against the greenback as Powell's dollar-negative comments dovetailed with signs of strength in the UK economy. The pound was up 0.94% in the afternoon at $1.3211. It reached $1.32295, its highest since late March 2022 after surpassing the 2023 high of $1.3144. Aiding the move was a survey that showed British consumer confidence held at an almost three-year high in August, adding to positive signals in the wider economy. The euro ended up 0.75% at $1.1195, just below an afternoon high of $1.12015, a price not seen since July 20, 2023. Dollar/yen fell to its lowest since Aug. 6, wrapping up the day down 1.36% to 144.27. The yen had been supported since BOJ Governor Kazuo Ueda earlier on Friday reaffirmed his resolve to raise rates if inflation stayed on course to sustainably hit the bank's 2% target. The "comments suggest that market turbulence won't deter the BOJ from considering more rate hikes in the future even if the next move isn't imminent," said Vasu Menon, managing director of investment strategy at OCBC. "As long as the move in the dollar-yen is orderly and gradual, this should not rattle global markets as much as it did earlier this month." Against the Swiss franc , the dollar weakened 0.52% to 0.848 francs. Dollar/Canada fell 0.82% to C$1.3511. The Australian dollar strengthened 1.36% to US$0.6795. The kiwi strengthened 1.53% to $0.6229. Bitcoin advanced 4.2% to $63,227.00. Sign up here. https://www.reuters.com/markets/currencies/dollar-steady-ahead-powell-speech-ueda-aims-calm-market-nerves-2024-08-23/

2024-08-23 05:05

ECB policymaker Kazaks sees room for possibly two more rate cuts this year Inflation trends consistent with ECB projections Kazaks: No further delays in meeting 2% inflation target JACKSON HOLE, Wyoming, Aug 23 (Reuters) - The European Central Bank has room to cut interest rates possibly two more times this year as inflation remains broadly on the declining path policymakers envisaged, ECB policymaker Martins Kazaks said. The ECB cut rates for the first time after a record string of hikes in June and markets expect a second move on Sept. 12 as economic growth remains anemic and wage pressures ease, supporting the argument that inflation will fall back to the 2% target next year. When asked if he would advocate a cut already in September, Kazaks said inflation is largely where the ECB expected it to be, so the case for gradual policy easing is intact. "We are broadly along the baseline of our projections and that is consistent with a gradual decline in interest rates," Kazaks, Latvia's central bank governor, told Reuters on the sidelines of the U.S. Federal Reserve's Jackson Hole Economic Symposium. "Our June projections assumed two more rate cuts this year and right now I don’t see any reason why we shouldn’t follow through," he said, adding that he would make up his mind about September only after August inflation figures are published and he saw the ECB's new projections. While some recent inflation prints have surprised on the upside, Kazaks said that focusing on single numbers risked missing the forest for the trees. He argued that broader trends in the economy are consistent with easing price pressures and that should eventually translate into lower inflation readings. "Our projections already assumed relatively quick wage growth and we had numbers this week showing an easing of these wage pressures, so that also supports a gradual easing path," Kazaks said. "Corporate profit margins are also declining." Growth in negotiated wages, a key number on the ECB's radar, slowed to 3.6% in the second quarter from 4.7% three months earlier and economists already said this solidified the case for a September rate cut. But Kazaks was also clear that the ECB should not tolerate any further slippage in the date when it met its inflation target, given copious delays already. "I will become concerned if our projections show that getting back to the 2% target is pushed out into 2026," he said. "We now expect to get there by the end of 2025 and it’s been pushed back far enough." Sign up here. https://www.reuters.com/markets/europe/ecb-has-room-gradual-rate-cuts-kazaks-says-2024-08-23/